Our Special Report of 13 February addressed the bomb attack which targeted an Israeli Embassy vehicle in central Delhi, injuring four people, including a diplomat’s wife. Police are currently hunting for a motorcyclist seen near the vehicle just before the explosion, but the authorities have so far been cautious in attributing responsibility for the attack.
Nevertheless, we maintain our assessment that Tehran is likely to have been responsible, particularly given the attempted bombing of an Israeli diplomatic vehicle in Tbilisi on the same day and the fact that an Iranian national was involved in a grenade attack in Bangkok (just after an explosion in an apartment) the day after the Delhi incident. Tehran is likely to be responding to the increasing pressure of international sanctions and the assassinations of several of its nuclear scientists, which it blames on Israel and the US. Consequently, the interests of both these countries remain at risk, and Indian police have raised security at several Jewish sites.
Delhi’s reluctance to implicate Tehran is likely to reflect its desire to avoid damaging bilateral relations. Prior to the incident a large trade mission to Iran had been announced, and this has not been cancelled. Indeed, India is seeking to bolster trade ties with its second largest provider of oil (after Saudi Arabia). Iran provides as much as 12% of India’s oil purchases (although this has fallen to around 10% recently). Many of India’s refineries have been designed to process Iranian oil, and would require significant investment to process oil from other countries. Delhi is keen to avoid this, since it is already battling a fiscal deficit for 2011-12 which may now exceed 5.6% of GDP, against the 4.5% target.
Meanwhile, the Foreign Secretary travelled to Washington and there are credible reports that Indian diplomats asked that their commitment to closer ties with the US not be judged on India’s insistence on adhering only to UN sanctions. It is hard for Delhi to compromise on this issue because it needs to boost economic growth. Meanwhile, Iran has agreed to accept payment for oil in Rupees, which will bolster trade between the two countries in other areas, especially given that sanctions are also affecting Iran’s ability to pay for Indian goods. However, while India will exploit the commercial opportunities presented by Iran’s current diplomatic and economic isolation, ties could still be damaged in the longer term, if India is forced to admit Iranian links to the recent attack in Delhi.